1. We have audited the accompanying standalone financial statements of
Hindustan Construction Company Limited (the Company), which
comprise the Balance Sheet as at 31 March 2015, the Statement of Profit
and Loss, the Cash Flow Statement for the year then ended, and a
summary of the significant accounting policies and other explanatory
information.
Management''s Responsibility for the Standalone Financial Statements
2. The Company''s Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 (the Act) with
respect to the preparation of these standalone financial statements,
that give a true and fair view of the financial position, financial
performance and cash flows of the Company in accordance with the
accounting principles generally accepted in India, including the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts)
Rules, 2014 (as amended). This responsibility also includes maintenance
of adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting frauds and other irregularities; selection and application of
appropriate accounting policies; making judgments and estimates that
are reasonable and prudent; and design, implementation and maintenance
of adequate internal financial controls, that were operating
effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
4. We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
thereunder.
5. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the standalone financial
statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial controls relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''s Directors, as well as
evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
8. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid standalone financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of
affairs of the Company as at 31 March 2015, and its profit and its cash
flows for the year ended on that date.
Emphasis of Matters
9. We draw attention to
a) Note 29.2 to the standalone financial statements regarding
managerial remuneration of Rs. 10.66 crore paid to the Chairman and
Managing Director for the financial year ended 31 March 2014, which is
in excess of the limits prescribed under the provisions of the
erstwhile Companies Act, 1956 and for which, the Company, has submitted
a review application with the Central Government; however approvals
in this regard is pending till date. Pending the final outcome of the
aforesaid matter, which is presently unascertainable, no adjustments
have been made in the accompanying standalone financial statements.
Our opinion is not qualified in respect of this matter
b) Note 34 to the standalone financial statements regarding the
Company''s investments in its subsidiaries, HCC Infrastructure Limited
and HCC Real Estate Limited, amounting to Rs. 474.36 crore and Rs. 0.25
crore, respectively, long term loans and advances due from such
subsidiaries amounting to Rs. 404.06 crore and Rs. 634.82 crore,
respectively, and other current assets (including interest) due from
such subsidiaries amounting to Rs. 28.44 crore and Rs. 319.64 crore,
respectively. The net worth of the aforesaid subsidiaries have been
fully eroded; however, based on certain estimates and the other factors
as more fully described in the said note, management considers the
decline in the value of investment as temporary in nature and believes
that long-term loans and advances and other current assets are fully
recoverable, and hence no provision in respect
of aforesaid amounts has been made in the accompanying standalone
financial statements. Our opinion is not qualified in respect of this
matter.
c) Note 35 to the standalone financial statements regarding
uncertainties relating to recoverability of uncompleted contracts and
value of work done and long-term trade receivables aggregating Rs. 1,181
crore and Rs. 241 crore, respectively, recognised in the earlier years in
respect of projects which were suspended or substantially closed and
where the claims are currently under negotiations/ arbitration/
litigation. Pending the ultimate outcome of these matters, which is
presently unascertainable, no adjustments have been made in the
accompanying standalone financial statements. Our opinion is not
qualified in respect of this matter.
Other Matters
10. We did not audit the financial statements of six unincorporated
integrated joint ventures, included in the standalone financial
statements, whose financial statements reflect Company''s net share in
profit of Rs. 5.39 crore for the year ended 31 March 2015. These
financial statements have been audited by other auditors whose audit
reports have been furnished to us, by the management, and our opinion
on the standalone financial statements
of the Company for the year then ended to the extent they relate to the
financial statements not audited by us as stated in this paragraph is
based on solely on the audit reports of the other auditors. Our opinion
is not qualified in respect of this matter.
11. We did not the audit the financial statements of an unincorporated
integrated joint venture, included in the standalone financial
statements, whose financial statements reflect Company''s share in
profit of Rs. 2.71 crore for the year ended 31 March 2015. These
financial statements have been certified by the Company''s management,
and our opinion on the standalone financial statements of the Company
for the year then ended to the extent they relate to the financial
statements as stated in this paragraph is based solely on, on such
management certified financial statements. Our opinion is not qualified
in respect of this matter.
12. The standalone financial statements for the year ended 31 March
2014 were audited by another auditor, Messrs K. S. Aiyar & Co.,
Chartered Accountants, who had expressed an unmodified opinion on those
financial statements; vide their audit report dated 2 May 2014. Our
opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
13. As required by the Companies (Auditor''s Report) Order, 2015 (the
Order) issued by the Central Government of India in terms of Section
143(11) of the Act, we give in the Annexure a statement on the matters
specified in paragraphs 3 and 4 of the Order.
14. As required by Section 143(3) of the Act, we report that:
a. we have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purpose of our audit;
b. in our opinion, proper books of account as required by law have been
kept by the Company so far as it appears from our examination of those
books;
c. the standalone financial statements dealt with by this report are in
agreement with the books of account;
d. in our opinion, the aforesaid standalone financial statements comply
with the Accounting Standards specified under Section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);
e. the matters described in paragraphs 9(b) and 9(c) under the Emphasis
of Matters paragraph, in our opinion, may have an adverse effect on the
functioning of the Company;
f. on the basis of the written representations received from the
directors as at 31 March 2015 and taken on record by the Board of
Directors, none of the directors is disqualified as at 31 March 2015
from being appointed as a director in terms of Section 164(2) of the
Act;
g. with respect to the other matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. as detailed in Notes 33 A (i) to (iii), 35 and 45 to the standalone
financial statements, the Company has disclosed the impact of pending
litigations on its standalone financial position;
ii. the Company, as detailed in Note 13 (b) to the standalone financial
statements, has made provision, as required under the applicable law or
accounting standards, for material foreseeable losses, if any, on
long-term contracts;
iii. there has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure to the Independent Auditors'' Report of even date to the
members of Hindustan Construction Company Limited, on the standalone
financial statements as at and for the year ended 31 March 2015
Based on the audit procedures performed for the purpose of reporting a
true and fair view on the financial statements of the Company and
taking into consideration the information and explanations given to us
and the books of account and other records examined by us in the normal
course of audit, we report that:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The fixed assets have been physically verified by the management
during the year and no material discrepancies were noticed on such
verification. In our opinion, the frequency of verification of the
fixed assets is reasonable having regard to the size of the Company and
the nature of its assets.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(b) The procedures of physical verification of inventory followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no
material discrepancies between physical inventory and book records were
noticed on physical verification.
(iii) The Company has not granted any loan, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section 189 of the Act. Accordingly, the provisions of clauses
3(iii)(a) and 3(iii)(b) of the Order are not applicable.
(iv) In our opinion, there is an adequate internal control system
commensurate with the size of the Company and the nature of its
business for the purchase of inventory and fixed assets and for the
sale of goods and services. During the course of our audit, no major
weakness has been noticed in the internal control system in respect of
these areas.
(v) The Company has not accepted any deposits within the meaning of
Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits)
Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v)
of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under sub- section (1) of Section 148 of
the Act in respect of Company''s products and services and are of the
opinion that, prima facie, the prescribed accounts and records have
been made and maintained. However, we have not made a detailed
examination of the cost records with a view to determine whether they
are accurate or complete.
(vii) (a) Undisputed statutory dues including provident fund,
employees'' state insurance, income-tax, sales-tax, wealth tax, service
tax, duty of custom, duty of excise, value added tax, cess and other
material statutory dues, as applicable, have generally been regularly
deposited with the appropriate authorities, though there has been
significant delay in a few cases. Further, no undisputed amounts
payable in respect thereof were outstanding at the year-end for a
period of more than six months from the date they become payable.
(b) There are no dues in respect of wealth-tax, duty of excise, duty of
customs and cess that have not been deposited with the appropriate
authority on account of any dispute. The dues outstanding in respect of
income- tax, sales-tax (including value added tax) and service tax on
account of any dispute are as follows:
Name of the statute Nature of dues Amount Amount
(Rs in crore) Paid Under
Proest
(Rs in crore)
The Income Tax Act, 1961 Income Tax 24.63 23.99
The Sales Tax Act Sales Tax/ Value 0.13 -
Added Tax/Entry Tax
4.70 -
16.32 1.90
67.64 2.81
The Finance Act, 1994 Service tax including 3.10 -
Interest and penalty,
as applicable
0.18 -
Name of the statute Period to which the Forum where dispute
amount relates is pending
The Income Tax Act, 1961 A.Y. 2006-2007 Income Tax Appellate
to 2010-2011 Tribunal
The Sales Tax Act A.Y 2010-2011 Supreme Court
A.Y 1997-1998 High Court
and 2012-2013
A.Y 1996-97 to Taxation Tribunal
2000-01, 2005-2008,
2007-08 to 2009-10
A.Y 2002- 2003, Appellate Authority-
A.Y 2004-2005 to up to Commissioner
2011- 2012 level
The Finance Act, 1994 January 2004 to Custom, Excise and
March 2006 Service Tax Appellate
Tribunal
A.Y 2004 -2007 Commissioner -Appeal
(c) The Company has transferred the amount required to be transferred
to the investor education and protection fund in accordance with the
relevant provisions of the Companies Act, 1956 (1 of 1956) and rules
made thereunder within the specified time.
(viii) In our opinion, the Company has no accumulated losses at the end
of the financial year and it has not incurred cash losses in the
current and the immediately preceding financial year.
(ix) The Company has delayed in repayment of following dues to the
financial institutions, banks and debenture holders during the year,
which were paid before the Balance Sheet date.
(Rs in crore)
Dues to Delay up to Delay 31 to Total
30 days 90 days amount
Financial institutions 57.89 63.92 121.81
Banks 145.42 142.80 288.22
Debenture holders 14.98 12.33 27.31
The Company has delayed in repayment of following dues to the financial
institutions, banks and debenture holders during the year, which were
not paid as at the Balance Sheet date.
(Rs in crore)
Dues to Delay 31 to Delay 91 to Total
90 days 166 days amount
Financial institutions 32.08 3.50 35.58
Banks 82.00 - 82.00
Debenture holders 7.05 - 7.05
(x) In our opinion, the terms and conditions on which the Company has
given guarantee for loans taken by others from banks or financial
institutions are not, prims facie, prejudicial to the interest of the
Company.
(xi) In our opinion, the Company has applied the term loans for the
purpose for which these loans were obtained.
(xii) No fraud on or by the Company has been noticed or reported during
the period covered by our audit.
For Walker Chandiok & Co LLP
(Formerly Walker, Chandiok & )
Chartered Accountants
Firm''s Registration No.: 001076N/ N500013
Place : Mumbai per Amyn Jassani
Partner
Date : 30 April 2015 Membership No.: 46447